Caterpillar Crushes Estimates With Q3 Beat And Raise

Shares of Caterpillar Inc. CAT gained more than 5 percent Tuesday morning and hit a new all-time high of $140.44 after the company impressed investors in its third-quarter earnings report.

Investors have plenty of reasons to be impressed with the earnings report which Caterpillar "crushed," Credit Suisse's Jamie Cook said in a research report. Excluding restructuring charges, the company would have reported an EPS of $1.95 which was 54 percent above the Street's estimate of $1.27.

Cook maintains an Outperform rating on Caterpillar's stock with an unchanged $146 price target.

Sales of $11.413 billion marked an increase of nearly 25 percent and came in 7 percent better than the Street expected, Cook also said in the report. Construction sales also rose 36.6 percent which helped contribute to margins nearly doubling from 9.2 percent in the same quarter a year ago to 18.2 percent and incremental margins were "impressive at 61 percent.

Bears do have one negative aspect that they can look at which is the growth in sales was driven by an increase in dealers' inventories. However, the demand backdrop simultaneously improved while backlog of $15.4 billion rose by $600 million quarter-over-quarter and $3.8 billion year over year.

Finally, Caterpillar now expects its total fiscal 2017 sales to be $44 billion which implies its fourth-quarter sales of $11.434 billion will come in ahead of the Street's estimate of $11.175 billion. Also, adjusted EPS (excluding restructuring) is now expected to be $6.25 for the full year versus a prior estimate of $5.00. This also implies a fourth-quarter EPS of $1.54, which is above the Street's estimate of $1.27 per share.

At time of publication, shares of Caterpillar were up 5.60 percent at $139.05.

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